Western International Securities Resolves Allegations of Failing to Timely Amend Representatives’ Regulatory Forms Disclosing $5.6 Million in Judgements and LiensWednesday, May 13, 2020
The Financial Industry Regulatory Authority (FINRA) Department of Enforcement recently approved a Letter of Acceptance, Waiver and Consent (AWC) submitted by Western International Securities, Inc. (Western), a brokerage firm that has approximately 475 registered representatives in approximately 175 branch locations. The firm is headquartered in Pasadena, California.
According to the AWC, Western failed to disclose and timely amend 52 registered representatives’ Uniform Application for Securities Industry Registrations or Transfer (Form U4) to reflect 163 liens, judgements and financial events that totaled over $5.6 million between October 2011 and June 2018. Western also allegedly failed to reasonably respond to inquiries and communications from FINRA’s Registration and Disclosure Department (RAD). Beginning in May 2015, RAD sent communications informing Western that its registered representatives were not disclosing reportable financial events in a timely manner. According to the AWC, Western still took several months to amend representatives’ Form U4s even after receiving these notifications.
Further, Western allegedly failed to respond to suspicious activities flagged by its own supervisory reviews, including background check reports, wage levies and annual compliance questionnaires. Finally, FINRA asserts that Western failed to establish, maintain and enforce a supervisory system, including written supervisory procedures designed to monitor the timely reporting of such events.
Based on the foregoing, Western violated NASD Rules 3010 and FINRA Rules 3110(a) and 2010. To resolve the allegations, Western consented to a censure, $325,000 fine and agreed to retain a qualified independent consultant to conduct a review of the adequacy of the firm’s compliance issues including: 1) ensuring the Form U4 amendments for financial events are filed in a timely manner; 2) ensuring that written supervisory procedures are reasonably designed to comply with rules and by-laws related to Form U4 financial event updates; and 3) ensuring that its supervisory system is reasonably designed to comply with rules and by-laws related to its process for investigating and completing reviews of potentially undisclosed financial events.
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